Micro Firms Are Not Small Business

Labels can be misleading.


By nature micro-businesses have five or less employees, including the owner.   However, throughout the world micro entities are big business.

Systems, structures and resources are typically limited and often not cutting-edge. They are small. Many are dynamic and innovative. Individually, businesses in this sector have been greatly impacted by the current economic turmoil. Finance lead-times can be short and margins wafer thin.

Cashflow is often the true and central lifeblood of such entities. The categorisation “credit card” financial management is an over simplification and harsh judgement. However, these aspects and references are indicative of opportune realities for this business type and those who seek to service them.

Collectively, micro-businesses are numerically greater than the number of medium sized and major regional, national and transnational corporations which operate in Australia, New Zealand, Britain and North America.

The skill set and entrepreneurism of the owners are often insufficient to generate growth, beyond the initial years of trade, and to sustain competitiveness and advantage.   That may explain in part why many in this subgroup do not aspire to substantially grow their operations. That mindset and parameter is often not recognised or respected by external consultants.

Increasingly, the greatest and most widespread needs for micro-businesses are integrated systems, structure and discipline. In short, support and infrastructure.

During the past three decades, major corporations have learnt and profited from the utilisation and marshalling of the capacity and drive of small and micro-business. Countless supply chains exhibit the evidence and consequences of downsizing, outsourcing, re-engineering with the proliferation of micro-businesses.

Buying groups, marketing networks, franchise chains and operating co-operatives provide immense scope if and when they are able to overcome one major impediment. That is, the allure of the desire for independence by small business owners.


The lessons of the past have been lost on, or possibly have never been learnt by, many contemporary owners and managers of micro-businesses.

Frederick Taylor has long worn the label of the father of “Scientific Management”. His research, findings, philosophies and applications about the division of labour were the touchstones of mass production, which was instrumental in the growth and success of entities like Ford, General Motors and General Electric.

Regrettably, the science of mathematics work against micro-businesses. The capacity for division and multiplication is limited with a maximum workforce of just five.

Time spent on administration, marketing, selling and networking can be all consuming, with little immediate returns. The financial imperatives of generating cashflow and earning need to be forsaken, even if for a short time.

Conversely, a full commitment to “doing the job” can have significant adverse intermediate and longer-term consequences. Neglecting administration, marketing, selling and networking can be perilous. It's a fine line between the two.

All too often micro-businesses do not have comprehensive, detailed and objective business plans. Cashflow projections documented by external accountants do not suffice. Many are in reality documented hopes, dreams and aspirations without addressing the issues of “why” and “how”.

So, one should be driven by and needs to respect the underlying philosophy of economics. That is, the allocation of scarce resources.


One epidemic which pervades the current crisis ravaged global marketplace, including among micro business owners, is short term, negative and small thinking.

A strong focus on cutting costs can and often will achieve the set   objective … to save costs. The unanswered question is: “At what cost?” Growth, enhanced margins and increased customer satisfaction appear to be off the agenda.   That is lamentable and often unnecessary.

Considerable value is possible from an effective and objective skills audit of all employees. Emphasis and priorities can be set, reset and refined. Complementary skills and resources may be necessary.

Most important and often overlooked is an analysis and determination of what is the driving force of the business. It may be production, services, sales, research, product development and logistics.

Cross referencing the two sets of findings can be enlightening, highlighting strengths, competitive advantage, gaps and deficiencies. It can also register and quantify the advantages of being part of grouping, regardless of its individual character and structure.

That is the true worth of the division of labour.


In these testing times, nepotism can and often does come to the fore. Looking after those in the nuclear and extended family is understandable, possibly laudable.   However, in business it can be simply dumb.

The issue is not family employment, but rather skills deployment.

Our DNA and genes are not necessarily the best pro-conditioners for sound employment and deployment decisions, be it first, second or third generation.

Micro entities and business at large deserve better. That in itself is a rare, unique and disciplined science.